Focused

California Gov. Gray Davis is focused on anything but energythis week as he sorts through 1,400 pieces of new state legislationawaiting his signature by a Sept. 30 deadline, but he is expectedto re-focus on the simmering electricity issues next month,according to aides in Sacramento, CA.

Although the proposed project is focused primarily on newelectric generation and large industrial/wholesale localdistribution loads, the backers of a proposed 212-mile natural gaspipeline from the Arizona-California border south into northernBaja, Mexico are testing potential market interest for thepipeline’s U.S. segment as part of an open season running throughJuly 14.

Belatedly, the California Energy Commission (CEC) is getting inits two-cents-worth in the state’s remaining gas settlement talksfocused on Southern California Gas Co. The overall thrust of theremaining talks should be to unbundle more, limit the monopolyutilities’ roles, and establish user fees so that only customerswho use certain services pay for them, the CEC has suggested,mirroring stances it has taken in electric restructuringproceedings.

Belatedly, the California Energy Commission (CEC) is getting inits two-cents-worth in the state’s remaining natural gas settlementtalks focused on Southern California Gas Co. which resumed Tuesdayin Los Angeles. A regulatory proceeding earlier in the monthbroadened the scope of the talks at the same time concludingsimilar negotiations centered on Pacific Gas and Electric Co.’snatural gas system in the northern half of the state.

Blocked in its bid for neighboring Southwest Gas, Austin,TX-based Southern Union Co. focused on the East, picking upapproval from its board of directors and that of the Fall River GasCo., on a merger agreement.

Amidst major merger rumors, Phillips Petroleum focused on itsown operations yesterday, as it announced a 50% acquisition ofYates Petroleum Co.’s coalbed methane acreage in Wyoming’s PowderRiver Basin. Financial terms were not disclosed.

Coho Energy Inc., a Dallas-based independent oil and gasproducer focused on exploitation of underdeveloped oil propertiesin Oklahoma and Mississippi, announced it has filed a petition forChapter 11 bankruptcy protection in Dallas’ Federal BankruptcyCourt. The decision to seek protection was taken by Coho andcertain subsidiaries because the resolution of a restructuringcannot be completed without the protection and assistance of thebankruptcy court, the company said. Timing of the bankruptcy filingwas imposed by several factors including the repayment accelerationof the Company’s $240 million debt by its bank creditors lastThursday (See Daily GPI, Aug. 20), the inability of the banks andthe bondholders (the two large creditor groups) to reach asatisfactory agreement with each other, and the potential for oneof the bondholder’s being granted a summary judgment in its lawsuitagainst Coho for full payment of principal and past due interest.Coho said it is continuing to discuss a solution to its capitalneeds with the banks, the bondholders and other potentialinvestors. The company expects to file a plan of reorganizationwith the bankruptcy court in the near future.

The congressional debate over electricity restructuring so farhas focused on whether its should be done as comprehensivelegislation or as piecemeal reform of the Public Utility HoldingCompany Act (PUHCA), but a third option may be tossed into the fraysoon.